Applied Digital Corporation: Chart Analysis

I use Renko Charting System to analyze the charts of the companies I deal with from time to time. Renko charting is very different from the Candlestick charting system and require some degree of learning curve. So, please don’t use Renko to take trading decisions if you are not familiar with this system.

APLD Monthly Chart: 1% Brick

Major Pattern

Applied Digital Corporation has completed the head and shoulder pattern on the monthly timeframe. After the neckline was broken, the price also broke an upward moving trendline and the price got hammered down at a faster rate.

The recovery is underway and we can take some profits out of the bounce.

Trade Idea

Entry Price : 4 dollars or below

Next averaging price : 3.7 to 3.45

Stop Loss: Below 3.3

Targets: 6.5 and 8.5. However, I will exit the trade as I get 10 to 15 percent return.

My Entry Price: 3.96

Major Risks

With the present trade war going on, there is a high probability that overall market can drop down tremendously as you have witnessed in the past few weeks.

If the broader market is weak, the price of APLD should also move southward. APLD is highly correlated with NVDA and usually both move at the same pace. If you check the chart of NVDA, you will see a similar chart pattern there also.

Another major risk is that the facilities APLD has developed and developing are high capital intensive. Renting the facilities around the clock is must to sustain the price of the stock. In present economic environment, this seems to be little difficult.

The competitors of APLD are not small players and achieving the required market share will be a challenging task for Applied Digital Corporation.

APLD has high beta and it is very volatile sometimes. Moving 10 plus percentage in a single trading day is a common thing on this counter. Trading without a strict stop loss can be detrimental. Please have your stop loss in place if you are trading this stock.

Disclaimer

Please refer to the disclaimer page on this website. I take only short term positions on APLD and I usually exit the trade if it gives me 10 to 15 percent returns. I am not a financial advisor nor a consultant. I am just sharing my views on the price movement of APLD and you can consider this article for informational purpose only. If you use my trading idea, you have to do at your own risk and no one else will be responsible for the profit or loss you incur.